Will cotton linter face wave of price rise?

Prices of cotton by-products have been rising after the Chinese Lunar New Year holiday. Downstream plants gradually restarted production around Feb 6-8 and there were more enquiries in cottonseed and cotton linter market. Some ginners and cottonseed oil plants also resumed operation earlier this year and sales in Shandong and Xinjiang improved somehow, pushing up the price of cottonseed.

Driven by rising oil meal futures and the concentrated resumption of work by cottonseed oil plants after the Lantern Festival (Feb 15), the procurement of cottonseed was picked up. Later, with the escalation of Ukraine-Russia conflicts, crude oil, soybean meal and soybean oil surged and cottonseed as a cotton by-product also witnessed consecutive increase.

Cotton linter price also kept firm and improved somewhat, but refined cotton plants in downstream sector have not been running with higher operating rates back from the Chinese Lunar New Year holiday, so they just purchase cotton linter to meet the minimal requirements and trades for cotton linter were inactive at high price. By later Feb, cotton linter for industry-grade refined cotton was at 6,900-7,000yuan/mt outside Xinjiang and that for staple-grade CLP was around 4,800yuan/mt.

Cottonseed price has been spurred by the strong momentum of oil meal resulting from the geopolitics and cotton linter suppliers become more eager to quote firmly, which is mostly triggered by the emotion and the market will still return to fundamentals and prices are expected to be largely stable instead of sharp increase.